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Fintech and what you need to know

The rise of Fintech - an amalgam of the terms "finance" and "technology" - created opportunities for service providers to offer innovative financial services using emerging technologies, and levels the playing field by enabling more people to have access to lower-cost financial services.

Over the past years a multitude of start-ups, and even traditional financial service providers, have begun to integrate technology and financial services. The mobile payments industry has grown very fast, fueled by the convenience of not having to carry around cash and the ease of paying digitally. In tandem a series of other Fintech services are fast-growing, including crowdfunding, peer-to-peer lending, retail investment and trading platforms, institutional trading platforms, and products and services offered through blockchain technology.

Fintech enables service providers to offer consumers 24/7 access to financial services via the internet or mobile applications, making it easier for people to manage their bank accounts, pay and borrow money, invest, and even obtain financial and investment advice. Fintech service providers also attain cost advantages by leveraging technology, such as dispensing with the need for a physical shop and lowering overhead costs. They have therefore emerged as alternatives to financial services offered by traditional financial institutions.

While the emergence of Fintech has brought about consumer benefits, investment opportunities, as well as industry growth and innovation, it also comes with associated risks and challenges. Greater consumer empowerment and choice is not without risk. The ease of mobile transactions and readily-available unsecured loans may be a catalyst to spend or borrow more than one can afford or need, leading to undesirable debt. Without the need to go through a traditional intermediary, investors could potentially end up investing in complex products that they do not thoroughly understand. Investing via Fintech platforms or service providers may incur different kinds of risks that investors may not be aware of.

Investors should protect themselves by having a clear knowledge of what they are investing in, understanding thoroughly the potential risks involved, whom they are transacting with and seek professional advice if in doubt. Learn more about different Fintech products/services in the following sections.